U.S. individuals are breathing a little easier given that gasoline prices attended down from record levels, but pump prices remain high, and the two-month slide could possibly be nearing a finish.
The nationwide average price for a gallon of gas dropped to $3.99 on Thursday, in accordance with AAA. Thats down 20% from the mid-June high, and its own the 1st time the common has dipped below $4 since early March.
Gasoline prices usually rise and fall with the expense of oil, and crude in addition has been dropping. The U.S. benchmark price is down nearly one-fourth since early June.
Other factors may also be behind this years roller-coaster ride in energy prices.
Gasoline prices hit an archive $5.02 on June 14. At that time, U.S. crude was about $120 a barrel and the benchmark international price was a good couple dollars above that. Since that time, however, oil prices have tumbled.
Oil prices have been rising since April 2020, as economies all over the world recovered from the shock of the pandemic, and reopened slowly initially, then quicker. Demand for energy outstripped supply, pushing prices higher through most of 2021 and early this season. Then in late February, Russias invasion of Ukraine caused oil prices to spike, plus they remained high into June but not as high as in July 2008 if inflation is known as.
HOW COME THIS HAPPENING?
High energy prices contributed to inflation, which led the Federal Reserve along with other central banks to improve interest levels. Concern has increased in recent weeks concerning the direction of the global economy.
A recession as well as slower growth hurts energy demand and usually pushes down oil prices. This is the scenario that oil investors now fear.
Despite having prices decreasing, OPEC on Thursday lowered its forecast of global oil demand for the others of the year and then year. The cartel based those expectations on a belief that economic growth in the U.S., China, along with other key countries will undoubtedly be slower than it previously forecast.
IS THERE OTHER FACTORS?
Its unusual for gas prices to fall through the summer, because thats the peak driving time for American motorists. Some analysts think the high prices have led drivers to lessen, however the evidence is mainly anecdotal.
Some states suspended their gasoline taxes, shaving more off the ultimate price at the pump, at the very least temporarily.
WHERE ARE GAS PRICES HEADED?
Most analysts dont think prices will spike for a while unless something unexpected happens, like a big storm that shuts down oil production in the Gulf coast of florida or floods refineries across the Gulf Coast. Which has happened before, and we have been still in hurricane season.
Patrick De Haan, an analyst for GasBuddy, said this week that absent something similar to a hurricane, gasoline prices should drop another 10 cents to 25 cents a gallon on the next few weeks.
Tom Kloza, an analyst for the Oil Price Information Service, is really a bit less sanguine. He says the 58-day streak of lower nationwide average gasoline prices may stumble soon.
Aside from the hurricane threat, Kloza says refineries which were running nearly full-steam will need to have a breather since they have delayed maintenance work, and that cant be delayed indefinitely.
THINK ABOUT THE U.S. OIL SUPPLY?
U.S. oil production hasnt fully recovered to pre-pandemic levels; its still down about 4.5% from 2019, based on the latest government figures, for May.
President Joe Biden has ordered releases from U.S. oil reserves. Kloza said even Biden bashers need to admit that the release of over 150 million barrels of (Strategic Petroleum Reserve) crude worked, but he said its unclear exactly what will happen when those releases end later this season.
WHATS ENERGYS ROLE IN INFLATION?
Higher charges for energy and food have already been key contributors to inflation. It works another much too. When gasoline prices slid in July, it helped slow the entire rate of inflation.
But gasoline prices in July were still 28% greater than per year earlier, and that helped inflation roar along at 8.5%.